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Cement sector exits Q4 with flat prices; western region emerges as new pain

Cement,

In terms of changes in cement prices, the March quarter (Q4FY23) has not been a good one for cement companies.

Most recent Vendor Channel Check by Elara Protections (India) Pvt. Ltd. Ltd. demonstrated that in March, the All India Average Retail Price decreased by 8 per 50 kg bag on a monthly basis to 371. With this, all-India normal concrete costs are probably going to increment by around 2% year-on-year yet may remain generally level consecutively in Q4FY23.

According to the Elara report from March 28, efforts to raise prices have not been successful because of increased volumes, lower-than-anticipated demand, and increased discount offers. Construction activities were also affected in some areas by unseasonal rains and a lack of labor, which affected cement demand.

Investors should be ready for slower sequential earnings growth in the upcoming quarterly earnings, as a result of this.

District wise, focal India kept a drop in costs 5 for every sack, trailed by North, West, East and South. South India saw the most extreme decay of Rs 10 for every sack consistently. The industry has been experiencing declining pricing trends for some time, primarily as a result of fierce competition for market share.

Having said that, pain is also being felt in the western region. Cement prices in Gujarat have fallen to Rs 10 per bag in March after experiencing a largely flat trend over the past few months. On the other hand, Maharashtra displayed a mixed trend, with Mumbai experiencing a high price of Rs 10 per bag. In Nagpur and Nashik, prices have decreased by Rs 5 per bag.

Prices may rise in April due to the cement industry’s strong June quarter.

As prices of key input fuels like petroleum coke and coal fell from their recent highs, easing input cost pressure provided some relief. “Based on our calculations, average fuel cost for the industry should decline by Rs 80-90 per tonne in 4QFY23, followed by a further decline to Rs 200 per tonne in 1QFY24 (based on prevailing coal/petcoke prices),” reads a recent Motilal Oswal Financial Services Ltd. report.

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